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Interventionist Theories

270

Mercantilism

270

Free Trade Theories

271

Theory of Absolute Advantage Theory of Comparative Advantage

272

274

Theories of Specialization: Some Assumptions and Limitations

276

How Much Does a Country Trade?

278

What Types of Products Does a Country Trade?

With Whom Do Countries Trade?

282

Trade Patterns Theories

278

279

Does Geography Matter?

Variety Is the Spice of Life

284

The Statics and Dynamics of Trade Product Life Cycle (PLC) Theory

285 285

The Porter Diamond

287

| Point |g^^^J35flfl Should Nations Use Strategic Trade Policies?

289

Factor-Mobility Theory

291

Why Production Factors Move

292

Effects of Factor Movements

293

The Relationship Between Trade and Factor Mobility

295

Looking to the Future:

In What Direction Will Trade Winds Blow?

C A S E : LUKOIL: Trade Strategy atja Privatized Exporter

299

Summary

302

J

Key Terms

304

Endnotes

304

7

Governmental Influence on Trade

306

C A S E : Making the Emperor's (and Everyone Else's) New Clothes:

Textile and Clothing Trade

307

Introduction

310

Conflicting Results of Trade Policies

311

The Role of Stakeholders

31 I

Economic Rationales for Governmental Intervention

311

Fighting Unemployment Protecting "Infant Industries" Developing an Industrial Base 312

313 314

Economic Relationships with Other Countries

316

Noneconomic Rationales for Government Intervention

319

Maintaining Essential Industries

319

Preventing Shipments to "Unfriendly" Countries

319

^ § j t ^ ^ 3 Should Governments Forgo Trade Sanctions?

320

Maintaining or Extending Spheres of Influence

321

Preserving National Identity

321

298

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